Green results on the fundamental front couldn’t salvage the zloty’s drop yesterday. Emerging markets continued to slide and with the domestic bond market also significantly softer there was little the unit could do except to hold on. Eventually the zloty ended the session just under 0.5% down against the euro and strong selling was seen across the board throughout the entire morning. The EUR/PLN pair looked firmly set for an attack on 4.10 but eventually came short of this level, largely thanks to the Slovakian Central Bank FX intervention which provided the entire region with short term relief.
The regional mood remains shaky and the EUR/PLN could very well be back on track toward the 4.10 mark today. Even though risk aversion is still the major story for emerging markets we do expect strong bidding in this area and do not rule out corrective action sometime later this week.
ČSOB Investment Research